Real GDP growth hit 10.3% in 2010, according to the National Bureau of Statistics, up from 9.2% in 2009. Stronger growth was driven by rising activity in most parts of the economy, thanks to loose credit conditions and a government-backed stimulus package that boosted investment. Economic expansion will slow to 9% in 2011 as stimulus spending comes to an end and policy tightening leads to a slowdown in growth in property investment. Weakening demand in major OECD markets will also serve to damp down export growth. However, strong income growth will support consumption, despite the fact that higher inflation will erode purchasing power. Low or negative real interest rates and relatively loose credit conditions will also encourage consumer purchases of high-value items.

During 2012-15 economic growth will slow to an average of 8.3% a year. The deceleration will largely reflect slower investment growth as more cities in China reach the stage at which mass redevelopment becomes economically costly. The contribution to GDP growth from net exports will also weaken as a strengthening renminbi, anaemic growth in many developed economies and declining Chinese competitiveness cause export growth to slow relative to import expansion. However, a rapid rate of job creation and rising wages should ensure sustained strong growth in consumption. The ongoing expansion of social services (and in particular healthcare, education and pension provision) will support growth in state spending, although a return to fiscal conservatism will act as a brake on public expenditure growth. There remains the risk that China could suffer a sharp economic correction in 2011-15. The frothy housing market and continuing massive overinvestment are the most likely sources of potential problems. The government's capacity to counteract economic crises is strong, as it proved in 2008-09, but its ability to do so without aggravating the imbalances that already threaten the economy is less certain.

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